For time being, considering the volatility, it looks prudent on the part of traders to remain neutral, Mazhar Mohammad advised.
The Nifty snapped a six-day losing streak to make a sharp comeback but in the last one hour, after India announced two coronavirus cases, the bears struck, wiping out all the gains and the index settled lower for the seventh consecutive session on March 2.
The two new coronavirus cases dampened the mood and index erased 300 points from the day's high. Globally, the infected cases jumped to over 85,000, with more than 3,000 deaths, including more than 2,900 in China, from where the outbreak started.
The Nifty closed below 11,200 and formed a large bearish candle on daily charts, as the closing was much lower than the opening.
Experts feel the technical-chart pattern indicates that the index could end the correction around psychologically important 11,000-mark if it consolidates around current levels.
In the morning, the Nifty opened sharply higher at 11,387.35 and touched an intraday high of 11,433 amid value buying in beaten-down stocks but late-hour selling wiped out all the gains and dragged the index to the day's low of 11,036.25. It closed 69 points lower at 11,132.80.
"The Nifty50 registered yet another long bearish candle as it has given up all the intraday gains in the post luncheon session. However, it seems to be trading close to the confluence of support levels, as at today's intraday low of 11,036, it tested the ascending trend line which is in progress from the October 26, 2018 lows of 10,004 levels," Mazhar Mohammad, Chief Strategist–Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
Mohammad said apart from this, critical long-term averages were placed around 11,111. Hence technically, the possibility of the correction getting culminated around 11,000 looked higher, provided the index consolidates in the 11,100-11,000 zone, he added.
In case of a pull-back attempt, initial upsides may remain capped in the 11,433–11,536 zone.
For the time, traders should remain neutral, Mohammad advised.The rising global growth concerns amid coronavirus fears increased the volatility. India VIX jumped 8.44 percent to 25.20 levels.
"India VIX is sustaining above the horizontal trend line on the daily scale and thus volatile swings may continue in coming days too," Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services, said.
On the options front, maximum Call open interest was at 12,000 then 11,800 strike while maximum Put open interest was at 11,800 then 11,300 strike.Call writing was seen at 11,300 then 11,400 strike while Put writing was seen at 11,300 then 11,000 strike.
"The options data is scattered at nearby strike, thus not giving any sense for immediate range. However, as per volatility, the broader trading range could be seen between 10,600 and 11,600 levels for the Nifty," Taparia said.
The Nifty Bank also traded in line with the benchmark and formed a large bearish candle on daily charts. The index fell more than 800 points from the day's high, closing 278.80 points down at 28,868.40.
"The uptrend has been severely fractured and repair is going to take some time. Contra long bets should be avoided, especially on a positional basis," Amit Shah, Technical Research Analyst with Indiabulls Securities, said.
"Traders should look to have a sell-on-rise approach. The next support zone on the downside for the index is placed near 28,350-27,900 zone, while the resistance is seen at 29,350-29,650," he added.Subscribe to Moneycontrol Pro's Annual plan for Rs 399/- for the first year. Use coupon PRO2020 (Available on Web & Android only).
